Payroll is the process of paying employees in the company compensation for their work while factoring in taxes and benefits. The process is repetitive and time-consuming, but is absolutely necessary to ensure that everyone in your company is paid the right amount on time.

In this article we go through the basics of payroll procedure and how to choose the right payroll management software for your operation.

What is payroll

Payroll is the procedure of compensating employees for their contributions to a company’s success, and is usually taken care of by either the accounting or human resources departments. It covers all aspects of employee pay, including the preparation of checks or bank transfers and maintaining records of each employee’s salary throughout the year.

While it may appear that making payments from the company to an employee is simple, there are several crucial factors to consider. Maintaining a uniform payroll process for each employee can help you avoid mistakes and stay compliant with applicable tax rules. For most businesses, the payroll process can be divided into five basic steps:

  1. Choose a payroll system.
  2. Formulate a payroll policy.
  3. Collect information from employees and set up an automatic deposit.
  4. Approve and submit the payroll.
  5. Make payroll records and archive them.

Payroll processing involves more steps than meets the eye. Once you’ve done the initial payroll system setup however, the workflow becomes a lot more manageable.

How does a payroll system work

You can run payroll swiftly and efficiently with the help of a payroll system, allowing you more time and energy to focus on your business.

Payroll systems take care of everything about paying wages and filing payroll taxes. In addition, they’re used to keep track of hours worked, calculate earnings, print and deliver checks, and more.

Many businesses set up a payroll system using Excel, but there’s a growing trend of using payroll software to automate the process.

Benefits of using a payroll software

Payroll software demands minimal input from employers. For example, changes to tax laws are automatically updated with the software, meaning businesses can worry less about staying compliant. This has numerous rippling benefits for employers.

Save Time

Payroll isn’t exactly a fun task though it’s a necessary one, and the roles responsible for payroll are unlikely to enjoy the repetitive tasks. One of the benefits of payroll software is the ability to make the job of employers easier and help them save time that could be better invested in other aspects of the organization.

Avoid Making Mistakes

Another beneficial aspect of payroll software is that it decreases the likelihood of costly errors, for example, paying your employees late or in the wrong amount. Mistakes like these could hurt company morale and, in the worst-case scenario, lead to legal troubles for your company and personally.

Payroll software has the advantage of considerably reducing the possibility of human error through use of its database and automated scheduling to ensure that your employees receive the exact compensation they deserve on time.

User Friendly

It’s challenging to figure out how to do payroll accounting correctly, especially if you don’t have any professional accounting education or credentials. Good payroll software is created expressly for audiences that fall into this category, alleviating stress through its intuitive and easy to use interface.

How to choose a payroll management software 

When choosing the right payroll software for your company, there are many factors to consider, including functionality, ease of use, support, integrations, etc. Here are the top key factors you should look for when choosing payroll software. 

Salary Payments via Direct Deposit

Setting up direct deposit arrangements with trusted banks enables you to deposit employee wages directly into their bank accounts without leaving the payroll system. 


While payroll management is sometimes a function of other systems such as HR management software, enterprise resource planning (ERP) software, or accounting software, these functions are often limited and only meant to manage a few employees. As your business expands, the number of employees will steadily increase, meaning that you’ll need to handle more complicated payrolls, which will necessitate the addition of functionalities like hiring, reporting capabilities, accounting books, and timesheets that come with dedicated payroll software. It is critical that the software you select here is able to integrate with your other systems to simplify the process and save time.

Able to Handle Different Types of Payment

Your payroll software must also be able to handle cost reimbursement, holiday pay, commissions, bonuses, and other taxable benefits in addition to salary.


Good software support is underrated and really counts where it matters. 

Choose a software provider who can promptly and clearly answer your questions and help you onboard your payroll software. Access to a good knowledge base is also immensely helpful for those times you need to make a quick reference.

Auto-run Functionality

Your software should be able to handle your payroll process automatically if it doesn’t need to change settings often. You can configure it to run whether you’re at work or on leave with auto-approve features.

Employee Self-Service

A self-service portal gives your employees convenient access to their payroll information. Businesses can save time and money by allowing employees to input and update their personal information, benefit elections, etc.

Should you outsource your payroll management?

Most entrepreneurs struggle with the question of whether to keep payroll in-house or to outsource it to a third party. The easiest way to decide between the two is to reframe the problem in terms of employee involvement and the cost.

Keeping a payroll system in-house involves both human and technological resources. Doing it all in-house means the business owner or administrator is in charge of all the tax calculations, employee payments, transfers, returns, manually collecting and securely maintaining employee records, etc.

Outsourcing payroll lets you delegate data entry, calculations, payroll processing, and other administrative tasks, and also absolves you of the burden of managing the software. 

Many new and fast-growing businesses usually end up outsourcing tasks like payroll management and accounting, as doing so saves the business owner’s time and cost of hiring an in-house accountant or human resources executive. 
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